Distributed Energy: Shades of Green

To many, distributed energy conjures up the vision of small scale solar power and wind generated electricity, and by inference a green feeling. The reality is that the some of the ubiquitous forms of distributed energy are decidedly not green in part because the primary reason for it has been to augment shortcomings of power on the grid and expediency has dictated behavior.

The current system of electricity generation and distribution is largely an artifact of the way we engineer things. A large plant is more economical per unit of energy produced. This is known as “economies of scale”. In the early part of the twentieth century central plants were rated at 60 megawatts. By 1970 the majority of plants were rated over 1 gigawatt (1000 megawatts) and this was largely driven by nuclear plants, which were designed for the large scale, likely because the control systems cost the same to build and man, large or small. Large plants dictated that we have transmission lines covering significant distances, incurring losses. In the US the losses average about 8%, but in some developing nations these could be up to 40%. The majority of this large loss is theft. There are also over a billion people not served by electricity at all. Ought they to be served in the conventional way with the associated losses? Or should we engineer distributed generation uniquely tailored to each environment?

Grid Parity: When new systems are conceived, their economic viability is judged by their ability to achieve “grid parity”. This is roughly defined as being on a par with the average cost of delivered electricity in that area. In most communities in developed nations this figure is in the single digits, or low double digit cents per kilowatt hour. Examples of the higher figures are New York and San Francisco, with the rank outsider the state of Hawaii weighing in at over 25 cents. The use of grid parity gives alternative power sources a clear hurdle to cross. But therein lies an inherent fallacy: averages ought not to dominate the discussion. An energy source providing power between 12 noon and 6 pm ought to be compared in price to the marginal cost of conventional electricity in that period. In many cases that is several times the average. Solar power can be expected to produce in that time period and ought to be accorded a commensurate advantage. By the same token, wind tends to blow at night on land, so would produce electricity during a low price period. In some areas nighttime power has practically zero value. However, if stored and delivered during peak hours, the value would be higher. This further underlines the need for storage as an important companion to wind energy.

But what is the meaning of grid parity for people not served by the grid, including the billion people mentioned above? Many of these places derive their power from diesel, and in some instances, kerosene. The high cost of the fuel would allow a number of alternative sources to achieve cost parity. In some of these communities, as in parts of India, the government often subsidizes the fuel price, which could have the unintended consequence of disadvantaging alternatives.

Shades of Green: Despite the outstanding examples of distributed power from wind and solar, distributed energy does not necessarily equate to clean generation. In fact the vast majority of backup power supplies are powered by diesel. In countries with uncertain power and frequent brown outs businesses employ diesel generators almost exclusively. Whilst diesel is an energy dense fuel and appropriate for the purpose, the health impact of emissions make it decidedly not green. Recent research posits it to be worse than second hand smoke as a cause of lung cancer. So, displacement of diesel power can be expected to be both cost effective and green.

Combined heat and power is an outstanding example of distributed energy. When power is produced a great deal of energy is lost in the form of thermal energy. Nuclear plants use considerable water to cool down the system and the steam is simply released. The most effective use of thermal energy is to use the steam and low grade heat in buildings and businesses. Since steam and heat cannot be transported effectively, power plants employing this energy conserving approach are by necessity located near users out in the community. The green aspect derives from the more efficient use of the fuel combusted: such plants typically have double the efficiency of conventional power plants. The carbon dioxide released is now halved per unit of energy produced. Incidentally the same argument applies to electric cars, which are 60% more efficient than conventional cars when compared on equivalent terms. The zero emissions at the tailpipe are replaced by emissions at the power plant, but the system efficiency reduces the emissions per mile driven. Electric vehicle naysayers are fond of saying that they are only as clean as the power running them. Not exactly.

Vikram Rao

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§ 4 Responses to Distributed Energy: Shades of Green

Interesting post and summary. You mention line losses in the U.S. of 8%, which seems a little low to me. Most discussions I’ve seen say that about a third of the power generated doesn’t make it to the end user. Or is that an apples and oranges comparison?

While on a tour at the Northwest DC intertie, I was quoted a 10% line loss when taking power from the Columbia River Gorge area between Washington State and Oregon to Los Angeles.

While I agree that this loss should be factored in to any equation, I would also think that the fact that the fuel is “free” should also be factored in when building excess capacity in order to accommodate for line losses..

I can accept the 8% number, but again, even if it were double that, since the fuel is “free” it would still make sense to adopt the renewable option.

The other costs that aren’t factored in when calculating “grid parity” are the external costs, that while they aren’t included in a gallon of diesel or a ton of coal, are in fact a very real cost that society pays.